As I lay in bed sleeping in on a lazy rainy Sunday morning I’m less than happy when I’m awoken to a call from my tenant saying he’s breaking his lease because the property was broken into for the second time in 6 months. Not the news I wanted to hear on my day off, but I wasn’t surprised either. During the past year, I couldn’t keep tenants for more than 6 months, had to replace the front door from being kicked in during a burglary, and received 2 midnight calls from the local Police.
I could’ve given up at this point on managing rental properties but it only made me more determined to create a plan with specific criteria so these problems were not repeated. As a result, I developed an ideal strategy to buying a rental property successfully to avoid these problems altogether. Today, I’m sharing it with you so you don’t have to learn the hard way like I did.
Identify type of tenant
The first step you should consider before purchasing a rental property is the type of tenant you hope to attract. This will affect what type of suburb you choose, what amenities should be close by, and what features the property itself should include. Types of potential tenants you could consider for your rental property include, students, families, professionals, singles, couples, and retirees.
Narrowing down your suburb
After you have identified your ideal tenant, you’ll need to narrow down a short list of potential suburbs that your preferred tenants would find appealing.
A good starting point are basic statistics for the area, to determine if your ideal tenants currently live in the area. Obviously if you're looking for professional couples, yet the area is populated with 70% retirees, your professional working tenants are less likely to want to live in that suburb regardless of how cool the home may seem to these young professionals. You can get free suburb statistics on RP Data.
Now you need to think about why your ideal tenants are attracted to this suburb is it the beaches, walking tracks, bars and restaurants, transport, shops, or sporting facilities?
Considering what amenities are in close proximity is also an will be very important for your tenants. For example, a young family will be more attracted to a school located close to your property. Retirees like to be within walking distance to a local general store to get their newspaper and have access to public transport as they may not be able to drive anymore.
When you have picked out your property, one last thing you should do before buying a rental property is knock on neighbours doors, ask them about the street and the surrounding blocks. They will tell you what agents want.
Choosing a property type
Now that you’ve narrowed down your search for your ideal suburb based on your ideal tenants, you’ll need to consider the property itself, features it offers and if those meet your type of tenant. For example, professional couples love open plan modern properties with an attractive atmosphere but are less attracted to properties with large backyards that require maintenance. On the other hand families with children need spacious backyards.
An example of a property that did not meet the needs of its best tenants was a brilliant home with loads of character that I tried to lease. The property was perfect for retirees in every way except one, it had 10 steps to the get to the front door! Ultimately, since I could not attract the people who would have paid the most amount of money for this mismatched property, I had to reduce the rent dramatically to find an older family with older kids.
By having a strategy before you consider buying a rental property, you’ll find it to be a quicker and easier process to fill at a great price and without finding you in my past rental situation. And moreover, hopefully attract the type of tenant who will want to live in the property for a long period of time since its perfectly suited for their lifestyle.
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